Experts See Upside in Russia-Ukraine Gas Dispute

Experts at a Washington forum on the recent row between Russia and Ukraine over gas say it will take time to assess the long-term effect of the dispute. But some see an upside to what analysts agree was a political saber rattling by Russia.

At the forum sponsored by the Jamestown Foundation, a Washington research organization, there was a general sense that by cutting off shipments, Russia used its energy resources as a political tool. Both Adrian Karatnycky, a scholar at New York's Freedom House, and Harvard University professor Marshall Goldman agreed that Gazprom and President Vladimir Putin wanted to remind Ukraine of its economic dependence on Russia.

Goldman says Russia believes that it is the winner in the dispute, having made Ukraine pay twice as much for gas as it did before, even though the new price is still well below world market levels. Karatnycky says, while the doubling of prices will shave one to two percent off Ukrainian economic growth this year, it will have the positive effect of making gas-dependent Ukrainian industry more efficient.

"It is moving the Ukrainian government to create conditions for energy exploration and energy efficiency. That, I think, is a very important thing," said Karatnycky. "It is reminding most of Europe that its interests, and its energy needs, are all part of a broader context in which Ukraine is an integral European factor."

Goldman emphasized that western Europe relies on Russia for a very large percentage of its oil and gas imports. Several of those pipelines transit Ukraine. Goldman said a newly assertive President Putin probably assumed that Europe would blame Ukraine and not Russia for the hardships associated with the brief cut off of Russian supplies.

"Europe is locked in. They'll back Putin," he said. "This is the reasoning, I think, that he [Putin] is going through. They'll back Putin because they want that energy. It's cold in Ukraine. It's going to be even colder in western Europe. Besides, [former German chancellor Gerhard] Schroeder is there. He's now been made an official in the consortium that is going to build the Baltic sea pipeline [to bring Russian energy to western Europe] and he is going to speak out in our behalf."

Goldman says Russia probably did not anticipate the more critical European response, in which the west Europeans are seeking to diversify their energy supplies.

Both speakers did agree that a troublesome aspect of the new price accord is the emergence of a shadowy middleman or broker that will oversee the Ukraine Russia energy deal. Details of the pricing accord are still not known and the brokerage firm, they say, probably includes criminal or Mafia elements.